Retailers racing to keep up with consumer demand – 47% of online
shoppers disappointed last holiday season

STAMFORD, Conn., October 12, 2017 -
Pitney Bowes (NYSE:PBI), a global technology company providing
innovative products and solutions to power commerce, today released the 2017
Pitney Bowes Global Ecommerce Study – the first study to
comprehensively analyze the global ecommerce landscape from both a
retailer and consumer perspective. The study is based on survey results
of 1,200 retailers from eight countries and 12,000 consumers from 12
global markets.

As retailers prepare for the upcoming holiday shopping season, the study
offers a detailed portrait of trends impacting online retailers and
consumers around the globe. Some of the study’s most interesting
findings are summarized below:

For many online shoppers, 2016 was a holiday to forget…

According to the National Retail Federation (NRF), retail sales in the
US alone increased 3.6% year-over-year during the 2016 holiday shopping
season and are expected to increase between 3.6% and 4% this year. But,
results of the 2017 Pitney Bowes Global Ecommerce Study reveal that
retailers still have a long way to go toward meeting consumer
expectations, particularly when it comes to the post-purchase experience
for online shoppers.

Nearly half (47%) of online shoppers globally reported frustration with
everything from shipping, to returns, to lost products and miscalculated
duties and taxes during the 2016 holiday shopping season. What’s worse
is that the number of unhappy online holiday shoppers rose six
percentage points (pp) over the previous year and increased
year-over-year in every single one of the 12 major markets surveyed.
Shoppers in Asia Pacific – particularly India (73%), Hong Kong (69%)
China (64%) and South Korea (58%) – reported the most challenges. In the
US, 36% of online shoppers experienced problems, up five pp from the
previous year.

“As consumers become more experienced with online shopping, they’re
shifting more of their holiday spend online and expecting better and
better service from retailers,” said Lila Snyder, Executive Vice
President and President, Global Ecommerce and Presort Services, Pitney
Bowes. “Online shoppers have an entire global marketplace at their
fingertips. They expect that there is always a way to get the product
they want, shipped where they want, when they want it. This creates both
opportunities and challenges for retailers.”

Snyder continued, “With even more purchases expected to be online this
year, retailers need to double-down on the elements of the consumer
experience that matter most – delivery, returns, tracking and
world-class customer care.”

A more experienced, demanding, frequent and global online shopper

Online shopping is ubiquitous in major global markets. 94% of
consumers have made a domestic online purchase – flat year-over-year.

Consumers are shopping online more frequently. More than one-third of
global consumers make online purchases at least once per week (up 4 pp
from the prior year).

70% of online shoppers have made a cross-border purchase (up 6 pp from
the previous year). Asia Pacific saw the biggest year-over-year
increases, led by India (18 pp), China (12 pp) and South Korea (8 pp).

Online shoppers are exercising a wider range of options when it comes
to shipping, collecting, or returning their items:

This includes in-store pickups (“click-and-collect”), shipping to
locations other than the buyer’s home, returning unwanted purchases
in-store, and returning unwanted purchases using pre-paid shipping
labels.

“Click-and-collect” – purchasing online and picking up in store – is now
common practice for 40% of global online shoppers, up from 28% the
previous year. In the US alone, this option is exercised by 46% of
online shoppers versus 27% in the previous year. The practice is most
common in Hong Kong where 69% “click-and-collect.”

Online shoppers report that 62% of their cross-border purchases and
59% of their domestic purchases take place on online marketplaces,
versus retailer websites. These trends have increased year-over-year
and are most prevalent in China, Germany, India and Japan.

Product assortment, better deals and easy checkout are the top three
reasons consumers choose online marketplaces.

Retailers are beginning to recognize the growth opportunity in
cross-border ecommerce. Business plans reveal a tipping point may be on
the horizon.

62% of retailers have a cross-border ecommerce business today, and the
vast majority of retailers who don’t offer cross-border, plan to in
the next 12 months. If all of these retailers execute against their
business plans, 93% will offer cross-border shopping by this time next
year – that equates to a 50% increase in cross-border retailers in
just one year.

One-third of retailers rate “international selling” as a top growth
lever for their business – equal to the value ascribed to domestic
ecommerce growth.

The average order value (AOV) of a cross-border purchase is 17% higher
than a domestic AOV. But, cross-border retailers must balance the
opportunity for higher AOV against consumer demand for lower prices.
50% of consumers who shop cross-border do so because of price.

Credit cards versus e-wallets – a dead heat…

Credit cards (like Visa and MasterCard) and e-wallets (like PayPal and
Alipay) have been locked in a battle for payment option supremacy for
several years. When asked what type of payment option they prefer when
making a purchase outside of their home country, 41% of consumers
chose e-wallets and 39% chose credit cards – the exact inverse of the
results from the year prior.

Preferred payment options vary by market. For example, US consumers
prefer credit cards (40%) over e-wallets (32%), while German and
Australian shoppers prefer e-wallets (Germany 61%:26%; Australia
64%:23%). Credit cards are most popular in Japan (74%) and South Korea
(65%).

“It is important that cross-border retailers focus on the consumers they
are trying to reach; not necessarily the consumers they are most used to
dealing with,” said Snyder. “That goes for developing their strategies
around payment options and just about every aspect of their global
ecommerce business.”

b. Operational prowess separates the winners from the losers. This is
particularly true in neighboring countries. The expectation is low cost
and high visibility of delivery, localized customer care, and minimized
duties and taxes.

3. Have the courage to go where the customers are.

a. When retailers implement cross-border strategies, they tend to start
where the transition is easiest – neighboring countries with similar
regulatory environments where people speak the same language. But, more
often than not, the greatest opportunity for cross-border growth and
success is further from home. Pitney Bowes’ analysis has found that the
prioritization of near-border markets has come at the expense of
underserving consumers in countries more apt to shop cross-border.
Entering new markets with different cultures, languages and laws is
complex, but the rewards can far outweigh the investment and challenges.

The 2017
Global Ecommerce Study is the latest industry research report from
Pitney Bowes. Earlier this year, Pitney Bowes released its annual Parcel
Shipping Index, which tracks international growth rates of parcel
shipping volumes and related expenditures. The index forecasts a 20%
increase in global parcel volumes in 2018.

About Pitney Bowes

Pitney Bowes (NYSE:PBI) is a global technology company powering billions
of transactions – physical and digital – in the connected and borderless
world of commerce. Clients around the world, including 90 percent of the
Fortune 500, rely on products, solutions, services and data from Pitney
Bowes in the areas of customer information management, location
intelligence, customer engagement, shipping, mailing, and global
ecommerce. And with the innovative Pitney Bowes Commerce Cloud, clients
can access the broad range of Pitney Bowes solutions, analytics, and
APIs to drive commerce. For additional information visit Pitney Bowes,
the Craftsmen of Commerce, at www.pitneybowes.com.

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